The Incorporated Societies Act 2022 (the new Act) was passed on 5 April 2022 but your society doesn’t need to do anything just yet. There is a transition period of several years that gives you time to become familiar with, and prepare for, the new regime. Until your society reregisters under the new Act, sometime from October 2023, it continues to operate under the Incorporated Societies Act 1908 (the existing Act).
Below is a summary of the key changes you should know about.
On this page:
- Comparisons between 1908 Act and 2022 Act
- Members’ consent
- Committee and officers
- Contact person for the society
- New financial reporting standards
- Documented dispute resolution procedures
- Documented recipient of surplus assets
- Societies will need to reregister
- How you can stay up to date
|Topic||1908 Act||2022 Act|
|Minimum number of members||15||10|
|Internal disputes||No requirement to have internal dispute resolution procedures||A society must have adequate dispute resolution procedures, and these must be specified in its constitution|
|Committee requirement||Committee not required||Must have a committee of at least 3 members|
|Independent members of committee||N/A||Unless regulations1 prescribe otherwise, majority of committee must be society members|
|Concept of an officer||Not explicitly defined||Includes all committee members, as well as others, for example, treasurer, CEO|
|Officers’ duties||Duties are not clearly articulated||Six broadly expressed duties modelled on directors’ duties in the Companies Act 1993 to:
|Annual General Meeting (AGM)||No guidance||Must be held within 6 months of the society’s financial year end|
|Financial statements filed with Registrar||Must be filed annually||Must be filed within 6 months of the society’s financial year end|
|Annual return||No requirement to file an annual return||Must be filed annually as outlined in section 109|
|Manner of preparing financial statements||A society is not required to apply XRB accounting standards, unless it’s also a registered charity||Only a 'small society' not registered as a charity is exempt from using XRB accounting standards|
|Distribution of surplus assets2 after winding up||Surplus assets can be given to any party||Surplus assets must be given to a not-for-profit organisation|
|Amalgamations||No legislative framework for amalgamations of 2 or more societies||Amalgamations can take place as outlined in the Companies Act 1993, but follow a more simplified process|
|Criminal offences||Generic offences set out in the Crimes Act 1961||Six offences that target egregious conduct including:
|Review of draft constitutions (rules documents)||The regulations permit the Registrar of Incorporated Societies to review any proposed rules or alteration of rules where such rules or alterations have not yet been enacted by a society.||This regulation has not been included in the regulations that are proposed to go with the 2022 Act.|
- Consultation on the proposed regulations closed on 22 November 2022 and MBIE is now considering the feedback received. From there, draft regulations will be prepared.
- Surplus assets are all assets remaining after the society’s outstanding debts are paid.
Members will need to give consent to become a member of a society. Don’t panic too much about this – for example, filling in an application form will generally be considered to amount to consent. By contrast, you can’t specify in your constitution that, say, everybody who lives within your suburb is deemed to be a member of your society.
- Each society will need to have a governing body (for example, a committee) — it won’t be enough just to have officers.
- Committees will need to have at least 3 members and the majority of the committee members must be members of the society.
- The new law sets out who qualifies to be an officer of a society.
- A person must consent in writing and certify that they are not disqualified.
- They must be 16 years of age or older.
- A person cannot be:
- an undischarged bankrupt
- prohibited from being a director or promoter of a company
- disqualified from being an officer of a charitable entity
- convicted and sentenced for certain offending (for example, a crime involving dishonesty)
- subject to particular orders (for example, a banning order)
- unable to comply with any qualifications for officers contained in the society’s constitution.
- The officers will also have defined duties similar to those of company directors including, such things as acting in good faith and in the best interests of the society or club. These duties have always existed – they have been set out clearly in legislation for the first time.
Each society will be required to have at least one contact person whom the Registrar of Incorporated Societies can contact when necessary. The contact person won't need to be an officer of the society.
The new law will introduce changes for how some societies prepare their financial statements. New thresholds will determine which societies will also need to have their financial statements audited.
From October 2023, once a society reregisters, it will have to start using External Reporting Board (XRB) accounting standards in its financial statements, unless it qualifies as a ‘small society’.
All societies will need to have procedures for resolving disputes and other grievances between members as well as between members and the society. These procedures must then be set out in their constitutions (rules).
Schedule 2 of the new Act contains a set of dispute resolution procedures societies may choose to adopt. If your society includes these procedures in your rules, they will be guaranteed to comply with the new Act.
The Government Centre for Dispute Resolution - a part of the Ministry of Business, Innovation and Employment - provides additional guidance on what good dispute resolution looks like that some societies may find useful:
When a society is wound up, after all debts have been settled, there can be assets that remain. For example, there might be money in the society’s account or land or buildings in its name. These are known as ‘surplus assets’.
Under the new Act, surplus assets must be given to one or more not-for-profit organisations. In your constitution (rules) your society must specify either:
- a specific not-for-profit organisation
For example, The ABC Scottish Dancing Society Incorporated, or
- a class of not-for-profit organisations
For example, not-for-profit organisations which are tennis clubs, or
- a description of not-for-profit organisations
For example, not-for-profit organisations which care for animals.
Your society will have some time to transition and complete your reregistration. The reregistration period will run for 2½ years — from October 2023 to April 2026.
The reregistration process will involve reregistering on the Incorporated Societies Register and providing us with an up-to-date constitution (rules document). Until then, your society will continue to operate under the existing legislation (Incorporated Societies Act 1908).
The regulations being developed now will provide more information about what societies will need to do to reregister. Consultation on the proposed regulations closed on 22 November 2022 and MBIE is now considering the feedback received. From there, draft regulations will be prepared.
Before the start of the reregistration period, we will provide your society with detailed information on what's involved in reregistering.
Some of the things you can't do until your society reregisters
Your society won't be able to:
- reduce its membership to 10 (there have to be at least 15 members, for now)
- stop using its common seal
- take appeals against decisions by the Registrar to the District Court (you’ll have to take them to the High Court, for now).
Some of the things you can't do once your society has reregistered
Once your society has reregistered, it won't be able to:
- ignore complaints from members (you will have to run a dispute resolution process that meets minimum natural justice standards)
- appoint as an officer a member who:
- is an undischarged bankrupt
- has been prohibited from being a company director or
- has been convicted of certain offences.
- present its financial statements to its members later than 6 months after the end of your financial year
- after winding up, divide any surplus assets between the members (you will have to give them to a not-for-profit entity named in your rules).
We will update the information here on our website throughout the transition period. You can also choose to receive updates from us directly to your inbox. Alternatively, you can follow us on Facebook.Sign up to receive updates from us Follow us on Facebook
If you have any questions or comments about these law changes, you can email us at firstname.lastname@example.org.
Published 18 May 2022, last updated 29 November 2022